Why new cars are getting more expensive

Car makers are increasing prices across the board, making it harder for motorists to find cash for a new set of wheels.

Tesla has increased Australian prices for the second time in a month, joining mainstream car makers struggling to adapt to rising parts and supply costs.

The Tesla Model 3 started from $59,990 plus on-road costs in March 2021, a figure that has climbed to $63,900 plus on-roads today.

Tesla’s Model 3 is Australia’s favourite electric car.

While that will annoy prospective customers, it’s nothing like the $US10,000 ($13,900) increase American customers were asked to pay for the Tesla Model Y.

Introduced in the US in 2020 for $US54,990, the Model Y now starts at $US64,990 ($90,000), suggesting its as-yet unannounced Australian price could be close to $100,000.

Tesla’s Model Y will not be cheap in Australia.

Elon Musk cited “recent inflation pressure in raw materials and logistics” as a challenge for the company this week.

Tesla isn’t alone in ramping up prices in Australia and beyond.

Renault turned heads in February by announcing sweeping price changes in Australia, including a $6100 increase for the otherwise unchanged Megane RS hot hatch now sold from about $65,000 drive-away.

Renault’s Megane RS suffered a sharp price increase.

Renault attributed the change to “significant material and shipping cost changes” in recent months.

The international semi-conductor shortage has made electronic parts harder to find – and more expensive – for the car industry.

Strong demand for new cars – attributed in part to a coronavirus-led desire to avoid public transport, and additional disposable income freed up by a lack of travel options – has contributed to long waiting lists and a lack of competitive pressure on car makers and dealers.

Extra safety equipment has also had a pronounced effect.

Toyota made headlines when its new-generation Yaris emerged for around 40 per cent more than the outgoing car, an increase due in part to a requirement to fit additional safety equipment such as airbags mounted between the driver and front passenger.

Advanced driver aids and high-tech additions such as a digital dashboard make the new Volkswagen Golf a much more expensive proposition than the previous version.

Kia customer need to find an extra $1000 to take home a Sorento GT-Line.

Some brands have largely kept a lid on price increases. Kia’s range-topping Sorento GT-Line is $1000 more expensive than this time last year, and Mazda’s MX-5 convertible is up by just $400.

Many luxury cars have increased in price.

Porsche’s entry-level 911 Carrera costs $5100 more today than it did in March 2021.

International queues for the G63 forced Mercedes’ Australian arm to raise prices.

The new Mercedes C-Class costs $12,000 more than the outgoing model, partially due to the inclusion of extra features including a AMG-Line styling pack as standard.

But Mercedes also raised the price of its Gangster-chic G63 four-wheel-drive by $30,000 to match international demand for the model.